Power companies face supply crunch as summer approaches

The U.S. power companies are facing supply crunch that could hamper their ability to keep the lights on as the nation heads into the heat of summer and peak hurricane season.

In the United States, extreme weather events such as storms, wildfires and drought are becoming more common. Consumer power use is expected to hit all-time highs this summer, which could strain the electric grids at a time when federal agencies are warning that the weather could cause reliability issues.

Utilities are warning of supply constraints for equipment, which could hamper efforts to restore power during outages. They are having a harder time rebuilding natural gas stockpiles for next winter as power generators burn record amounts of gas after the shutdown of dozens of coal plants in recent years and extreme drought cuts hydropower supplies in many Western states.

Richard Glick, chairman of the U.S. Federal Energy Regulatory Commission FERC, said earlier this month that Increasingly frequent cold snaps, heat waves, drought and major storms challenge the ability of our nation's electric infrastructure to deliver reliable affordable energy to consumers.

Federal agencies that are responsible for power reliability like FERC have warned that grids in the western half of the country could face reliability issues this summer as consumers crank up air conditioners to escape the heat.

Some utilities have already had problems due to the heat. Texas' grid operator, the Electric Reliability Council of Texas ERCOT, was forced to urge customers to conserve energy after several plants shut unexpectedly during an early heat wave in mid-May.

In mid-June, Ohio-based American Electric Power Co imposed rolling outages during a heat wave after a storm damaged transmission lines and knocked out power to over 200,000 homes and businesses.

The U.S. Midwest is at risk because demand is rising while nuclear and coal power supplies have declined.

The Midcontinent Independent System Operator MISO, which operates the grid from Minnesota to Louisiana, warned that parts of the coverage area are at increased risk of temporary outages to preserve the integrity of the grid.

Supply-chain issues have already delayed the construction of renewable energy projects across the country. Wisconsin's WEC Energy Group Inc and Indiana's NiSource Inc resorted to planned coal plant shutdowns in recent months because of renewable delays and tight power in the Midwest.

As they plan for severe storms, utility operators are conserving their inventory of parts and equipment. Operators have been creative over the last several months.

Nick Akins, chief executive of AEP, said at the CERAWeek energy conference that we are doing a lot more splicing, putting cables together rather than laying new cable because we're trying to keep our new cable for inventory when we need it.

Transformers, which are often located on top of electrical poles and convert high-voltage energy to the power used in homes, are in short supply.

The company has had to look at alternative supply options for low voltage transformers, according to PSEG Chief Executive Ralph Izzo, a New Jersey-based Public Service Enterprise Group Inc.

You don't want to exhaust your inventory because you don't know when that storm is coming, but you know it's coming, Izzo said.

Some utilities are facing a waiting time of more than a year for transformer parts, according to the National Rural Electric Cooperative Association and the American Public Power Association in a May letter from U.S. Energy Secretary Jennifer Granholm.

Summer is just beginning, but U.S. weather has been about 21% warmer than the 30 year norm, according to data provider Refinitiv.

If we have successive days of 100 degree-heat, those pole top transformers start popping like Rice Krispies, and we would not have the supply stack to replace them, Izzo said.